While your lawn may be greening up, don't expect that to have the same effect on the company that helps you get it that way. Scotts Miracle-Gro
The maker of namesake Miracle-Gro plant fertilizer blamed the late start of warmer weather for wilting profits to a range of $1.14 to $1.18 per share this quarter, down 18% from last year's second-quarter results of $1.40 per share. That's a far cry from the $1.42 analysts had been expecting the yard-care company to post.
"Weather always dictates the launch of the season and this year got off to a slower start than we've typically experienced," says CEO Jim Hagedorn, which is true enough. He says that now that warmer weather is upon us, the company has experienced some strong growth for the first two weeks of April. Considering that the first half of the year accounts for only one-quarter of the company's business, management is leaving intact full-year guidance of 5% to 7% sales growth, and flat profits.
Excluded from that total will be somewhere between $15 million and $20 million in charges related to a voluntary wild-bird seed recall which will appear in Scotts' second-quarter earnings, to be released at the end of the month. As readers may recall, Scotts has something of a history of one-time charges in its results, such that investors probably ought to consider it a part of the company's way of doing business when trying to value it.
Although sales of Miracle-Gro, Turf Builder, and Roundup products -- the last of which it licenses from agricultural giant Monsanto
Like a dandelion whose taproot can penetrate 10 to 15 feet into the soil, Scotts still has most of its growing season ahead even with the fiscal year half over. Trading at just 14 times forward earnings estimates, it shouldn't take a miracle to see more growth here.